Rohm and Hass

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Write up for Rahm and Haas (Group 4) Rohm and Haas launched a product Kathon MWX in Dec 1983 for less than 1000 gallon capacity. Sales in first five months for Kathon MWX are $12000. Kathon 886MW and Kathon MWX were sold through a network of formulator/Distributor. Kathon 886MW had a 30%share of $18 million maintenance biocide market for large systems. The issues which we are addressing here are, * Does Kathon MWX like Kathon 886 MW be privately branded by Rohm & Hass?
“The company offered private branding on kathon 886 MW but not on Kathon MWX”
As quoted by a company manager
“… We want the end-user to know it’s a Rohm and Hass Product…”

* Formulators included Kathon MWX as part of their maintenance service,
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So small machine company i.e. individual systems can buy more number of goods in bulk rather than buying goods individually. This strategy encourages customers to buy products in bulk i.e. boxes. This strategy should be continued by Rohm as it should be useful to increase in sales.
A typical small machine shop had 22 machines, each with a reservoir capacity of 50 gallons. By using Kathon MWX they could keep the fluid 2-5 weeks longer.
Taking the above situation we can find the total costs a consumer should bear.
Metalworking fluid concentrate average cost is $5.68/gallon and it serves for 25 gallons. So for 50 gallons this would cost $11.36. Kathon MXW would cost $2per packet and for 50 gallons it would cost $4. The waste disposal per gallon is $1.36. This is diluted liquid and so for 50 gallons it would cost $68.So the total cost for consumer would be $83.36 per machine. So for 22 machines the total cost is $1833.92.
Similarly cost for well known competitor was found out by assuming that waste disposal cost for both companies is same. The cost for 50 gallons is $31(7.55*2*2). Estimated total cost is $109.
Total cost for small company would be $2398. So difference between final costs of Kathon MWX and Sump Saver tablet is $564. So increase in cost is possible.
Analysis for the pricing strategy at $6, shows the benefits as, (Recommendation -1) * For end users it might be a loss in consumer surplus but it is still more economical compared to

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